European Offshore Wind Companies Push Into Asian Offshore Wind Market

The world is watching as Chinese companies take on the offshore wind market. As per S&P Global Market Intelligence, Chinese turbines today cost less than half the global average. It places the Chinese in advantageous positions for expansion in less established wind markets such as Latin America and Eastern Europe. Although Chinese offshore wind majors – such as Xinjiang Goldwind Science & Technology Co. Ltd. and Mingyang Smart Energy Group Ltd. – look to grow their international portfolios in these regions in the coming years, the European offshore wind companies are driving a push into the Asian offshore wind market, as they seek to gain a foothold in the region. While they lag behind the Chinese while competing in prices, western turbine makers still have a technological edge over their Chinese competitors. It’s an edge they will try to make the most of, as they would hate to meet the same fate as counterparts in the PV domain, who were completely overrun by Chinese manufacturers.

As it stands now, Goldwind, Mingyang and Envision Energy Ltd. — China’s three biggest suppliers — received over 23 GW of orders for new turbines in the first half of 2022, against 8.7 GW by Western vendors. Keeping up with China’s rapid deployment of offshore wind farms has become extremely challenging for other countries. The government’s feed-in tariffs appear to primarily drive Beijing’s growth in the sector. After the domestic success, Chinese wind turbine producers have garnered worldwide clout, a template the country’s manufacturers have used across sectors. The battle is now shifting decisively to offshore wind, where the European manufacturers are seen to enjoy a lead, and a market that is finally opening up beyond Europe and the Americas, besides China off course.

Status of Global Wind Power

As per Global Wind Energy Council (GWEC), a total of 21.1 GW of offshore wind capacity was commissioned globally last year – mostly driven by China. China made up 80 per cent of offshore wind capacity added worldwide in 2021, bringing its cumulative offshore wind installations to 27.7 GW. Wind auction activities bounced back in 2021 with more than 88 GW of wind capacity awarded globally.

Further, GWEC expects the addition of 557 GW of new capacity in the next five years under current policies. That is more than 110 GW of new installations each year until 2026.

Growing Demand for Offshore Wind Energy in Asia

Asia Pacific is set to become the largest offshore wind market by 2030, according to GWEC. Asian countries, particularly the Southeast Asian market, are exploring ways to exploit their renewable potential as part of ambitious government net-zero targets. For instance, South Korea has a national target of achieving 12 GW of offshore wind capacity by 2030, up from the existing 142.1 megawatts. But red tape has marred the swift progress as the developers wade through permits from nine different ministries in a process that takes an average of seven years.

Taiwan is also encouraging offshore wind initiatives with the third of its series of auctions coming recently, totaling 3 GW of the projects. Japan is another proponent for offshore wind energy as the island country aims to install 10 gigawatts of offshore wind by 2030, and 45 gigawatts by end of the following decade. Furthermore, the country eyes the generation of 36-38 per cent of its energy in 2030, up from 20 per cent in 2020.

This is not just limited to states’ efforts as it trickled down to electronics mammoths, including the likes of TSMC, SK Group and Samsung Electronics, making pledges to achieve 100 per cent renewable electricity in their worldwide operations by 2050.

India also has a high potential for offshore wind – about 194 GW. After a slow start, the target is 30 GW by 2030. India will auction 4 GW of offshore wind by the end of the current year itself, while it will be 17 GW by end of 2025-26. Further, by December 2026, we may see the commissioning of the first of the 1.0 GW offshore wind projects.

Western Interest in Asian Market

From Germany to Spain, the European offshore wind companies are aggressively moving into Asian offshore wind market as the push for decarbonization opens up opportunities in the region. The fundamental shift in demand for renewables in the region, partly due to a push by US expertise giants requiring suppliers to satisfy renewable power targets and partly owing to consumers’ and governments’ interests, is what that’s attracting these western turbine makers.

For the advantage of European offshore wind companies, the technological advancement is a critical point of difference with Chinese companies. Experts suggest that European turbine technology is over a decade ahead of what the Chinese have to offer. To take advantage of this crucial point of difference, Europeans are keen on making a move.

To circumvent the laborious permissions requirement, as in the case of South Korea, international turbine makers are also exploring viable options like JVs and partnerships with native corporations.

Denmark’s Vestas has gone into a three-way partnership with Korean wind tower firm CS Wind. Similarly, a French wind turbine maker GE Renewable Energy also explored the opportunity to strengthen its stronghold in the Asian market by signing a memorandum of understanding with Hyundai Electric earlier this year.

Germany’s WPD signed a cooperation agreement to provide more than 1 gigawatt of wind power – the equivalent of one nuclear reactor – in the Taiwanese semiconductor industry. In Japan, the company partnered with the startup Japan Renewable Energy on an offshore wind project in Nagasaki Prefecture.

Norway’s Equinor is also considering several renewable energy projects across Japan, including a wind farm off the coast of the northern island of Hokkaido. It reached an agreement with Korea East-West Power on offshore wind development.